Entrepreneurs at mercy of land-grabbing officials

PUBLISHED : Friday, 05 May, 2006, 12:00am
UPDATED : Friday, 05 May, 2006, 12:00am

Local governments are reaping huge profits by riding roughshod over private property rights, reports Bill Savadove from Wenzhou

Huang Yunsheng has spent a decade trying to resurrect a business venture that collapsed amid a lack of funds and government corruption in the 1990s, when Wenzhou's brand of freewheeling capitalism created the mainland's biggest private companies.

The victim of a land swindle by a corrupt government official after the collapse of his business, Mr Huang's experience highlights two key problems facing mainland entrepreneurs: a lack of political power and weak protection of private property.

Perhaps a visionary, Mr Huang gave up a successful leather business to make low-polluting industrial boilers, after seeing the smoke from factories cloud the view of mountains surrounding Wenzhou.

But he was ahead of his time. Companies considered environmental protection a waste of money. The venture floundered and he went bankrupt in 1996 because he could not repay a loan.

The success stories of the so-called 'Wenzhou Model' of development are well known and private business - including 41,000 private firms and more than 230,000 small entrepreneurs - now accounts for more than 90 per cent of the city's economy.

Mr Huang's venture was the opposite - a failure.

A court ordered the auction of his prized asset - nearly 6,000 square metres of land in the rapidly developing western part of the city and a 2,140 square metre factory on the land - to pay creditors.

But Mr Huang says when the auctioneer announced the sale, it understated both the size of the land, by more than 1,500 square metres, and the factory, by nearly 1,000 square metres. The notice did not even give the exact address of the plot, a deterrent to buyers.

The sale went through for 2.7 million yuan. Mr Huang estimates the lot was worth more than double that at the time and would fetch 10 times that amount now. He claims the winning bidder was a relative of an official of the Wenzhou court that ordered the auction.

'Who is the law serving?' Mr Huang asked. 'For China's laws to be truly fair, for citizens to receive equal rights in the face of the law, I am accusing these dirty and corrupt officials.

'Local officials are like emperors. They are really brazen. When an official is rising in stature, he does whatever he wants.'

The official he accused, who has since been promoted to the provincial level, could not be reached for comment.

Mr Huang has tried to get the case reopened by writing long letters of complaint. Protests to various government offices earned him jail time. He even gave more than 20,000 yuan worth of bribes in liquor and cigarettes to officials in the hope that they might intervene.

He lost his property amid a land shortage in Wenzhou that is so bad that many companies are forced to seek factory sites elsewhere. One estimate forecasts the city's available land will run out within a decade. A mainland magazine dubbed the head of Wenzhou's land bureau 'the most important man in the city', eclipsing the mayor and the Communist Party secretary.

Land shortages are common across booming Zhejiang province and this has caused land grabs by local governments, pushing farmers off their fields and residents out of their homes. Local officials then arbitrarily set land prices, leaving room for corruption and misuse of the resource.

'If local governments continue reaping big profits from land sales, they won't stop this reckless behaviour. It is difficult to solve this problem because it involves the vested interests of many parties,' said Yao Xianguo, a professor of economics at Zhejiang University.

The mainland recently shelved a law that would have offered better protection for private assets, including land, preventing lawmakers from approving the legislation in March amid a conservative backlash against market reforms.

Mr Huang's former plot of land on busy Xishan Road is now used by a supermarket and several small factories, but he still has not given up on his business idea or his claim to the land, which he passes on his way to his workshop further outside the city. 'I get angry every day when I pass by,' he said.

The failure of his business has changed the 51-year-old's lifestyle. He has sold his Mercedes-Benz and now lives with his daughter and son-in-law. 'I have nothing now,' he said.

Instead of designer clothes, he wears a synthetic leather jacket as he oversees workers machining boiler parts in his workshop. His persistence, which even his family jokes about, is the real symbol of Wenzhou's entrepreneurial spirit.